How to calculate working capital

Working capital – a combination of cash and liquid assets that are necessary to finance the activities of the company. Knowing the amount of working capital, you can more effectively manage the company and make investment decisions. The value of working capital characterizes the ability and speed of repayment of the current obligations of the company. If the company does not have working capital or is very modest, then most likely it will not be successful. The calculation of working capital is also useful for evaluating the efficient use of company resources. [1] Formula for calculating working capital:
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Hang current assets. Current assets are assets that can be converted into cash within one year. Such assets include cash and short-term capital. For example, accounts receivable, deferred expenses and stocks are current assets.
As a rule, current assets and their total value are indicated in the balance sheet of the company. Continue reading →